ZAGREB, April 8, 2025 – Croatia is facing significant labor market challenges caused by a shrinking and aging population and fast technological advances. Over the last decade, the country has lost close to 400,000 residents, with projections suggesting a further 19 percent drop in the next three decades. By 2050, the proportion of elderly above 65 could reach 30 percent of the population. By 2035, it is projected that Croatia will need more than 300,000 workers to meet the demands of a rapidly changing labor market with an increasing focus on green and digital jobs.
The lack of available skilled staff is one of the main barriers to business investment and a faster green transition, and the reason behind labor shortages in key sectors of the economy, such as tourism, construction and industry. Lack of skilled workers is also a major limiting factor in services including ICT, health, social and long-term care.
The Government of Croatia has already taken several important steps to address these challenges. For example, under the Recovery and Resilience Plan, Croatia implemented important labor market reforms with the goal of improving adult learning and better targeting active labor market policies. Croatia is also implementing the Demographic Revitalization Strategy, has introduced amendments to the Aliens Act, employment programs for vulnerable groups, and grants for upskilling and reskilling in green and digital industries.
To further strengthen and support these interventions and policies, the European Commission (EC) Representation in Croatia and the World Bank Croatia Office jointly organized a Tackling Croatia’s Workforce and Skills Shortages conference examining the causes and proposed policy solutions for workforce and skills shortages based on experiences across the EU and the World Bank’s extensive analytical work. The conference also highlighted how the EC’s recently launched Union of Skills initiative aims to improve education and training at all levels to build skills for quality jobs and lives and strengthen the competitiveness of the European economy.
“The Ministry of Labor, Pension System, Family and Social Policy has identified key areas of action, and we have focused our activities on the inclusion and activation of underrepresented groups in the labor market, providing support for skills development, training and education of employed and unemployed persons, and improving working conditions for both Croatian and migrant workers,” stated Ivan Vidiš, State Secretary at the Ministry of Labor, Pension System, Family and Social Policy.
“What is crucial for a better understanding of the needs of the economy today, but especially in the coming period, is cooperation with the employers, in order to identify real and concrete needs for competencies for sectors that are growing such as the ICT sector, construction, tourism and transport and which we as the Republic of Croatia want to focus on in order to prepare quality and relevant educational programs, according to which future workers for the labor market will be educated.”
To address labor market and skills shortages, multifaceted solutions are at the disposal of the Croatian authorities. A comprehensive approach includes increasing labor market participation through targeted services for less active groups such as youth, elderly, low skilled people, women and migrants. Youth could benefit from strengthened outreach, expanded apprenticeships and internships, provision of incentives for employers, and complementing start-up grants with entrepreneurship training. Women’s participation could be boosted through improved access to childcare, increasing the network of long-term care facilities, supporting women in entrepreneurship, and designing gender-sensitive active labor market policies (ALMPs). For better integration of migrants, developing a new migration strategy, strengthening regulations related to recruitment agencies, investing in language and cultural training, and expanding one-stop-shops for integrated services would be needed.
Enhancing the development of skills to respond to the demands of the green and digital industries, scaling up whole-day schools and modernizing curricula, strengthening industry partnerships, and improving career guidance are key. Boosting upskilling and reskilling programs and strengthening lifelong learning are additional important contributions for addressing existing challenges. Improving international migration partnerships through Global Skills Partnerships (GSP) would help fill skills shortages by facilitating training and migration. Finally, upgrading the labor market information system (LMIS) to forecast skills, track outcomes, and ensure a user-friendly interface would enhance workforce development policies.
“People are the strength of the Croatian economy. Building on investments supported by the Recovery and Resilience Plan and the European Social Fund plus (ESF+), such as the innovative voucher system, Croatia can further invest in its education, upskilling and reskilling policies, to improve competitiveness and promote inclusiveness,” noted Zrinka Ujević, Head of the European Commission’s Representation in Croatia.
"If Croatia can further advance policies to harness the untapped potential of the domestic labor force, attract foreign workers across the skills spectrum and elevate the skills of both current and future workers, it could pave the way for stronger economic growth and increased competitiveness in this changing world of work,” said Anna Akhalkatsi, World Bank Division Director for the European Union. “Drawing from our successful experiences in other countries, the World Bank stands ready to support Croatia's efforts to address labor market challenges and build a resilient economy for the future."
The event gathered policy makers, representatives of local government, the European Commission, the World Bank, the international community, as well as the private sector, think tanks, academia, and civil society. The conference also hosted a panel discussion with distinguished experts on the causes and cures of labor market shortages.
About the World Bank in Croatia
The World Bank has been a partner to Croatia over 30 years. During this period, the Bank has supported more than 50 projects, totaling almost $5 billion and provided knowledge and technical assistance to help strengthen institutions and support policymaking through more than 330 reports and studies.
The World Bank currently provides knowledge, technical assistance and financing in the areas of, digital transformation and the green transition of the economy, justice service delivery, education, business environment, land administration, science and technology, post-earthquake reconstruction of key health and education facilities, social policy, long-term care, and public administration.
